What it is
Contraction is ARR lost from customers who stay but at a lower recurring level — seat reductions, edition downgrades, module removals. It is not full logo churn.
How it’s calculated
Sum negative ARR movements on still-active logos. Keep contraction separate from cancellation churn so GRR diagnosis stays actionable.
Where it breaks
Contraction breaks when downgrades are booked as churn+new, when temporary pauses are treated inconsistently, or when multi-product accounts net expansion and contraction into one mute line.
In the board pack
Call contraction out in the waterfall and in GRR commentary. Renewal playbooks need it distinct from logo loss.
Keep the written definition stable across close, the board pack, and diligence so the same word never means two math models.
When this metric moves, point to the source schedule and the bridge components — not a screenshot from a private workbook.